Three neuroscientists, including a married couple from Norway, have won the 2014 Nobel prize in physiology or medicine for their discovery of the brain’s internal GPS.

Their work, which collectively spans four decades, revealed the existence of nerve cells that build up a map of the space around us and then track our progress as we move around.

The groundbreaking research transformed neuroscientists’ understanding of the brain’s ability to navigate and answered a question that had stumped scientists and philosophers for hundreds of years: how do we know our place in the world?

John O’Keefe, 75, a US-British citizen at University College London, received half of the award and takes a share of 8m Swedish kronor (£690,000) for his pioneering work in 1971 that identified “place cells” in the brain that map the environment. Born in New York to Irish immigrant parents, he is a keen basketball player and claims never to have given up his dream of playing in the NBA.

On hearing that he had won the prize O’Keefe said yesterday: I’m delighted and thrilled. I’m still in a state of shock. It is the highest accolade you can get.” He said in the past he had given prize money to charity and put some into science-related funds. “Prize money should be spent on the common good.” He also praised the funding system in Britain, adding: “I don’t know how I would have fared in the American system.”

John Stein, professor of physiology at Oxford University, said: “This is great news and well deserved. I remember how great was the scoffing in the early 1970s when John first described place cells. ‘Bound to be an artifact’, ‘he clearly underestimates rats’ sense of smell’ were typical reactions. Now, like so many ideas that were at first highly controversial, people say: ‘Well that’s obvious.’”

The remaining half of the prize was shared by May-Britt Moser, 51, and her husband, Edvard, 52, who work at the Norwegian University of Science and Technology in Trondheim. The two met in the 1990s as postdocs in O’Keefe’s lab, where they learned how to record signals from rats’ brains.

May-Britt Moser is only the 11th woman to have won the medicine prize since it was first awarded in 1901. But rarer still are Nobel laureate couples: the Mosers are only the fifth to have won the Nobel prize. The Curie family had a phenomenal record, with Marie and her husband Pierre sharing the physics prize in 1903, and their daughter Irene and her husband Frédéric Joliot sharing the chemistry prize in 1935.

May-Britt Moser was in a meeting when she heard she had won the prize. But her husband was on a plane to Munich and could not be reached. Staff at the Nobel Foundation hoped to have the news announced by the pilot mid-flight. Speaking moments after the award became public, May-Britt said: “I was crying. I was in shock and I’m still in shock. This is so great.”

The couple’s secret, she said, was sharing the same vision. “We love to understand and we do that by talking to each other, talking to other people, and trying to address the questions we are interested in in the best way we can. To be able to discuss this, when you get an idea on the spot instead of planning a meeting in one or two or three weeks, makes a huge difference,” she said.

In the late 1960s, O’Keefe became fascinated with how the brain controls behaviour. He set out to record signals from individual nerve cells in rats’ brains as the animals moved around a room. He discovered that certain nerve cells in the hippocampus fired when the animals reached a specific place in the room. These “place cells”, he showed later, helped the rat build up inner maps of its environment.

More than 30 years later, May-Britt and Edvard Moser, who trained under O’Keefe, were recording brain signals from rats as they moved around. They noticed an extraordinary pattern of activity in a neighbouring part of the brain called the entorhinal cortex. Specific nerve cells sprang into action when the rats passed through different locations. These “grid cells” provided the brain with the equivalent of latitude and longitude, and together with place cells formed an inner GPS in the brain.

Humans are thought to have similar cells in their own brains, and damage to these areas may explain symptoms of dementia and other brain diseases. The early stages of Alzheimer’s can affect the hippocampus and entorhinal cortex, causing people to lose their way and forget their surroundings.

“All three scientists awarded the prize have dramatically changed how we understand the brain’s navigation and memory systems,” said Hugo Spiers, head of the spatial cognition group at UCL. “Grid cells and place cells offer one of the few bridges neuroscientists have linking the cellular level to the cognitive level, as they help explain how individual brain cells help us navigate, remember the past and imagine the future.”

John Williams, former head of neuroscience and mental health at the Wellcome Trust, said: “John O’Keefe has been at the forefront of the past 30 or 40 years’ pioneering work in terms of understanding how the brain encodes space. Above all else, he is a Renaissance man. He looks widely and broadly across neuroscience and he’s a keen, enthusiastic basketball player.”